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Tuesday, May 3, 2011

Jordan: Four Challenges

By Yusuf Mansur
This commentary was published in The Jordan Times on 03/05/20

Jordan today stands at a crossroad, with four economic challenges - unemployment, poverty, inflation and corruption - that need to be addressed with ingenuous swiftness. Failure to do so or a laggard, relaxed, attitude will not only destroy opportunities that may arise from the temporal doom of other economies in the region but also bring unwarranted consequences domestically.

Here are the four challenges that need to be tackled:

- The inflation rate in Jordan in 2010 was 5 per cent, up from -.7 per cent in 2009 and down from 13.9 per cent in 2008. According to the Food and Agriculture Organisation, basic food prices will likely rise by 50 per cent this year, prompted in part by rising fuel prices and the falling US dollar.

Jordan, an importer of 86 per cent of its caloric intake and 96 per cent of its energy needs, will see a strong inflationary pressure this year. The poor spend over 40 per cent of income on food and fuel; hence, their spending power will be severely curtailed.

Furthermore, inflation being imported, it is a wild card that can be triggered by regional unrest, and since it is due to factors outside domestic control, it cannot be dealt with through monetary policy instruments, including the exchange rate.

- Unemployment, which reached a zenith of 19.6 per cent in 2003, two years after Jordan received 300,000 repatriated Jordanians from the Gulf, with their savings of $1.6 billion, is on the rise again. True, unemployment has fallen over the years to 12.7 per cent in 2008; the trend since then has been upwards.

In 2009, unemployment reached 12.9 per cent, and 13.1 per cent in 2010. The first quarter of 2011 showed an increase over the first quarter of 2010; hence one can surmise that unemployment this year is trending up, which is not a happy sign. Furthermore, given that the unemployment among the youth, which make up 65 per cent of the population, is 25.6 per cent, the majority of the nation’s young will most likely be unhappy. (By the way, the University of Michigan created an index that has become known as the Misery Index, which is the sum of inflation and unemployment rates. A rise in both inflation and unemployment will cause misery among a large group of people.)

- Poverty has not fallen over the years, but has increased in 2008 to 13.3 per cent from 13 per cent in 2006, according to the 2008 Household Expenditure and Income Survey of the Department of Statistics. This occurred despite huge outlay by the government in 2008. Moreover, since that outlay was non-recurring (does not happen every year), poverty will most likely be around 20 per cent. In other words, one of five people will be below the poverty line.

- The fourth challenge, the catalyst for negative behavioural exuberance and consequent mayhem, is corruption. The common perception is that corruption has been on the rise since the last IMF reform programme ended in 2004. Jordan, which was until then known for low levels of corruption, became subject to rumours of large-scale corruption, which, if proven founded, could not only derail a costly reform process but also become the means and venue for unrest, since most likely people will blame corruption for usurping the fruits of the boom years (2004-2008), that were also lost with the bust (2009-until now).

Corruption has also paralysed a large segment of government. Few officials would dare nowadays make a decision that requires thinking outside the box. After years of acting almost without a care about the public, the very same officials have seemingly chosen a policy of appeasement and hesitation, which is just as bad as corruption, if not more. The paralysis we witness nowadays in decision making, as one committee is formed after another, shows that the approach is not right for solving urgent and pressing economic maladies.

Enter the large young population of Jordan, which is heavily affected by the four challenges, into the equation, and the commonsensical outcome is that what is required is a sense of urgency in policy making and implementation.

Politicians should heed the words of Adam Smith who, three centuries ago, said: “No society can surely be flourishing and happy, of which the greater part of the members are poor and miserable.”

About Me

I graduated from the French University in Beirut (St Joseph) specialising in Political and Economic Sciences. I started my working life in 1973 as a reporter and journalist for the pan-Arab magazine “Al-Hawadess” in Lebanon later becoming its Washington, D.C. correspondent. I subsequently moved to London in 1979 joining “Al-Majallah” magazine as its Deputy Managing Editor. In 1984 joined “Assayad” magazine in London initially as its Managing Editor and later as Editor-in-Chief. Following this, in 1990 I joined “Al-Wasat” magazine (part of the Dar-Al-Hayat Group) in London as a Managing Editor. In 2011 I became the Editor-In-Chief of Miraat el-Khaleej (Gulf Mirror). In July 2012 I became the Chairman of The Board of Asswak Al-Arab Publishing Ltd in UK and the Editor In Chief of its first Publication "Asswak Al-Arab" Magazine (Arab Markets Magazine) (www.asswak-alarab.com).

I have already authored five books. The first “The Tears of the Horizon” is a love story. The second “The Winter of Discontent in The Gulf” (1991) focuses on the first Gulf war sparked by Saddam Hussein’s invasion of Kuwait. His third book is entitled “Israeli-Palestinian Conflict: From Balfour Promise to Bush Declaration: The Complications and the Road to a Lasting Peace” (March 2008). The fourth book is titled “How Iran Plans to Fight America and Dominate the Middle East” (October 2008) And the fifth and the most recent is titled "JIHAD'S NEW HEARTLANDS: Why The West Has Failed To Contain Islamic Fundamentalism" (May 2011).

Furthermore, I wrote the memoirs of national security advisor to US President Ronald Reagan, Mr Robert McFarlane, serializing them in “Al-Wasat” magazine over 14 episodes in 1992.

Over the years, I have interviewed and met several world leaders such as American President Bill Clinton, British Prime Minister Margaret Thacher, Late King Hassan II of Morocco, Late King Hussein of Jordan,Tunisian President Zein El-Abedine Bin Ali, Lybian Leader Moammar Al-Quadhafi,President Amine Gemayel of Lebanon,late Lebanese Prime Minister Rafic Hariri, Late Palestinian Chairman Yasser Arafat, Haitian President Jean Claude Duvalier, Late United Arab Emirates President Sheikh Zayed Bin Sultan Al Nahyan,Algerian President Shazli Bin Jdid, Jamaican Prime Minister Edward Siyagha and more...